A-shares strong enough to withstand China-US trade war, bullish market in 2019

By Xie Jun Source:Global Times Published: 2018/8/9 22:28:42

Experts say bottom is near and rebound will soon come

Investors check the A-share market at a securities brokerage in Jinhua, East China's Zhejiang Province in July. Photo: VCG

Mainland stock markets surged on Thursday following the China Securities Regulatory Commission (CSRC)'s efforts to deepen reforms in the capital market and expand opening-up.

The bottom of the recent stock market slump is already in sight, and the A-share market will soon start to rebound, experts told the Global Times on Thursday.

The Shanghai Composite Index surged by 1.83 percent, or 50.31 points, to 2,794.38 points as of closing time on Thursday, while the Shenzhen Component Index rose by 2.98 percent, or 252.98 points, to 8,752.20 points.

As many as 65 stocks surged by their daily trading limit of 10 percent, while only eight stocks slumped by 10 percent.

Li Daxiao, chief economist at Shenzhen-based Yingda Securities, said that the recent low of 2,691 points on July 6 should be the bottom of the stock market in the short term.

According to Li, the mainland stock markets have made a turn for the better as the general financial policies are becoming more proactive.

A statement from the CSRC on Wednesday noted the commission will launch multiple measures to further push the opening of the capital market.

For example, it will speed up implementation of measures to further ease the restrictions on overseas capital's equity ratio in the domestic securities industry.

Also, the CSRC will accelerate the preparation work for the Shanghai-London Stock Connect program, which should be launched before the end of this year.

The CSRC will also support international indexes like the MSCI to increase the A-shares' proportion within these indexes, the statement noted.

"Opening up of the financial market, such as increasing the proportion of A-shares in international indexes, will bring a large amount of overseas capital into the mainland markets, which will change the A-shares' liquidity status," Li told the Global Times on Thursday.

The regulator is also continuing to deepen the reform of the domestic stock issuance system, while also perfecting the delisting system, according to the aforementioned CSRC statement.

Change in investor mood

Li, meanwhile, noted that domestic investors' confidence in A-share market has dropped to a level that it can't slide any more.

"In the past few weeks, many investors have not dared to buy any more stocks - it shows a freezing point in investor mood. Beyond that point, investors will take action [to buy in again]," Li said.

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, also told the Global Times on Thursday that usually a bearish stock market in China lasts about four years, based on past experience.

"By that standard, and also recent signs of supportive government policies, the A-share market is expected to welcome a bullish year in 2019," Dong said, but he added that the deteriorating China-US trade tension will still be a negative influence hovering over the domestic stock market in the near future.

Newspaper headline: A-share surge on Thursday

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